(Yicai Global) March 20 -- Shares of Yonyou Network Technology, a leading Chinese provider of corporate service software, plunged by the exchange-imposed daily limit as competition is likely to increase after Huawei Technologies said it will enter the enterprise resource planning market.

Yonyou Network [SHA: 600588] tumbled 10 percent to close at CNY25.40 (USD3.69) a share today. The stock is still up 5 percent so far this year.

The market has over-interpreted the news of Huawei's entry into the ERP sector, Beijing-based Yonyou Network told Yicai Global. From the industry's perspective, it takes three to five years to produce a mature ERP product, and Huawei is using its software internally, which has a limited impact on the existing competitive landscape, the company added.

Huawei plans to release MetaERP next month, a software that uses the telecoms giant's self-developed operating system, database, compiler, and language, founder Ren Zhengfei said in a recent speech. MetaERP is used across Huawei's global divisions, completing the annual settlement of its general ledger and showing that the software is ready for market, Ren added.

ERP is a data management system for manufacturing firms that integrates production resource, human resource, financial, and information management. China's ERP market grew 13 percent to CNY38.5 billion (USD5.6 billion) in 2021 from the year before, according to data from Qianzhan Industrial Research Institute. Set up in 1988, Yonyou Network has the biggest market share among ERP vendors in China.

The company expects net profit to have plunged by as much as 72 percent to CNY200 million (USD29 million) in the 12 months ended Dec. 31 from a year earlier, impacted by higher research and development outlays and slow revenue growth amid the Covid-19 pandemic, it said in January.

Editor: Martin Kadiev